Virendra Pandit
New Delhi: With Tata Consultancy Services (TCS), India’s largest software services provider, reducing its workforce by 2 percent (12,000 jobs) in 2025-26 from its global force—its stocks hit a 52-week low on Monday—this sector is likely to face significant reverses, the media reported on Tuesday.
TCS had an employee headcount of 613,000 as of the second quarter ended June 2025.
The company on Sunday said that it will cut its staff by 2 percent and lay off around 12,000 from its global workforce. Going ahead, other IT companies are also likely to lay off around 125,000 IT workers as they increasingly adopt Artificial Intelligence (AI) and other tech disruptions.
IT industry trade body National Association of Software and Service Companies (NASSCOM) has, in a report titled ‘Workforce realignment and industry transformation,’ hinted at what it foresees for the future of the IT industry.
While NASSCOM did not implicitly name TCS, this report came just a day after the company said it will layoff of 12,000 employees, the reports said
On Monday, NASSCOM said that in the near term it expects some “transitions” and “workforce rationalisation” as organisations shift toward product-aligned delivery models in response to increasing client demands.
It also highlighted that the IT industry is currently at an inflection point, with AI and automation becoming central to new business operations.
“Over the next several months, we anticipate some transitions as organisations pivot toward product-aligned delivery models, driven by rising client expectations around agility, innovation, and speed. This shift is likely to reshape traditional service delivery frameworks and, in the near term, may lead to some workforce rationalisation as traditional skillsets are re-evaluated,” it said.
Looking ahead, “technology will continue to serve as a powerful catalyst for growth, making continuous skilling, upskilling, and cross-skilling, vital to developing future-ready and resilient workforces”.
According to NASSCOM, the IT industry, to sustain India’s leadership in the AI era and bridge the skilling gap for talent, will require “deeper collaborations among industry, academia, and government.”
Until March 2025, over 1.5 million professionals were trained in AI and GenAI skills across levels, and advanced AI skilling initiatives reached over 95,000 employees in leading listed firms. This covered topics such as AI-native cloud, embedded AI, and applied intelligence certifications.
“Hiring trends will continue to evolve, with increasing demand for deep, specialised expertise. There is no one-size-fits-all solution. Each enterprise will navigate this transition based on its unique strategic needs,” NASSCOM added.
Reeling from the TCS layoffs shockwave, the IT industry believes that cost pressures, AI impact and automation hit hard, according to a report.
Tarun Pathak, Research Director at Counterpoint Research, was quoted in media reports as saying that while TCS clarified the job cuts are not driven by AI, it does come at a time when automation and AI adoption are increasingly influencing workforce decisions across the industry.
“Globally, companies are reassessing roles and skills to align with new digital priorities. For Indian IT services companies, this marks a transition towards more efficient and performance-focused workforce models,” he said.
TeamLease Digital CEO Neeti Sharma said most companies are now looking towards an AI-led transformation. “They are making heavy investments in upskilling their existing employees and the new ones being onboarded. The ones that do not upskill or fit the future structure, may have to be let go. So, we will see changes across companies, many positive and few negatives in the long run,” she said.
TCS is retraining and redeploying staff to become more agile and future-ready amid rapid disruptions in technology, particularly around AI platforms.
Its decision to cut workforce is primarily targeted at the middle and senior management, which will impact employees from different countries and domains where TCS operates.
TCS, however, assured that this transition is being planned with “due care” to ensure no disruption in delivering service to the clients.
In the April-June quarter, TCS’s operating margins narrowed 20 basis points to 24.5 percent, amid the company’s plans to boost them to the 26-28 percent levels.
Just two weeks ago, TCS also said that their ‘priority’ focus is delivering wage hikes for its over 6 lakh workforce.
The TCS employee attrition rate climbed 13.8 percent on a last twelve-month (LTM) basis as of the end of the April to June quarter of 2025-26. This marked a marginal rise on a quarter-on-quarter (QoQ) basis, compared to its 13.3 percent levels in the January-March quarter of 2024-25.
With the attrition rate hitting a ‘concerning level’ as of the April-June quarter, the company will now focus on retaining top-level talent, which is difficult to build through fresh hiring.